Are You Covered? FDIC Consumer Highlights

New rules have limited the fees banks and other financial institutions can charge on some services, but in order to preserve their bottom line the costs of other services could go up. Here are some recent tips from the Federal Deposit Insurance Corporation (FDIC) to minimize increases. You can also visit their Website to find out more about FDIC insurance coverage basics including what it covers and account ownership categories http://www.fdic.gov/deposit/deposits/insured/basics.html. The FDIC just released its Summer 2010 Consumer News…highlights include:

FDIC’s Summer 2010 Consumer News: Rules on Deposit Insurance, Free Checking, Bank Failures and Mergers

Bank Accounts Are Changing: What You Need to Know – Costs may go up for checking and savings, but here are ways to pay less by going back to the basics 

  • Comparison shop so you don’t pay more for accounts than you have to. 
  • Protect against unexpected costs by monitoring communications from your bank. 
  • If overdrawing your account is an ongoing problem, look into alternatives to high-cost overdraft programs. 
  • Minimize fees at the ATM.

$250,000 Federal Deposit Insurance Amount Now Permanent – The financial reform law includes a permanent increase in the basic federal deposit insurance limit

  • The permanent increase of deposit insurance coverage from $100,000 to $250,000 is especially helpful to long-term CD owners. 
  • The law created a new temporary program that will provide full insurance coverage for deposits in noninterest-bearing transaction accounts at all insured banks, regardless of the dollar amount. While these transaction accounts are primarily used by businesses with large balances in their checking accounts, any depositor can qualify. 
  • The massive new law also includes the creation of an independent Consumer Financial Protection Bureau located within the Federal Reserve System to monitor and regulate financial services such as debit cards, credit cards and mortgages.

What If Your Bank Fails? First, Stay Calm – The different ways the FDIC protects depositors

  • Don’t panic. Federal law requires the FDIC to pay insured deposits — all the money determined by the FDIC to be within the federal insurance limits — “as soon as possible” after an insured institution fails.
  • Most of the time, the FDIC is able to find a buyer for the failed institution.
  • By law, the acquiring bank can lower the interest rate on your deposit account, but you also have the right to withdraw the money without penalty.
  • If you have money over the federal insurance limit, you become eligible to receive payments of some or all of the uninsured deposits based on how much the FDIC recovers.

Having Deposits at Two Banks That Become One – Special FDIC insurance rule protects customers with deposits over the $250,000 limit for at least six months after a merger or a closing

  • The FDIC allows the separate deposit insurance coverage to continue until the CD matures, so that the depositor doesn’t have to take a penalty for an early withdrawal.